Gold firms as traders weigh prospects of sizeable Fed rate cut

Gold climbed for a fourth straight day on Thursday as investors held onto hopes the US Federal Reserve would trim interest rates by a significant margin this year, even after the central bank pushed back against the idea of a cut in March.

Spot gold rose 0.3% to $2,043.80 per ounce by 0615 GMT. On Wednesday, bullion touched a more than two-week high of $2,055.89 before paring gains to end the session 0.1% higher.

U.S. gold futures fell 0.3% to $2,061.20.

The Fed is confident that inflation will come to the desired 2% range, and they have kept the window open for interest rate cuts, just not so much for one in March, keeping gold supported, said Jigar Trivedi, a senior analyst at Reliance Securities.

The Fed left interest rates unchanged and knocked down the idea that the U.S. central bank could cut rates in the spring, but dropped a long-standing reference to possible further hikes.

Futures pared bets for a rate cut in March to 35.5% from 90% at 2023-end, but increased chances of a reduction in May to 96%, according to LSEG’s interest rate probability app IRPR.

Traders are pricing in about 142 basis points (bps) of Fed rate cuts for this year, up from bets of about 130 bps of reductions on Wednesday morning.

Markets also took stock of troubles at regional U.S. lender New York Community Bancorp, increasing appeal for safe-haven assets such as bullion and U.S. Treasury bonds.

Yields on benchmark 10-year Treasury notes , which are inversely related to bond prices, languished near their lowest in more than two weeks.

Data showed U.S. private payrolls rose far less than expected in January. Investors are now awaiting the non-farm payrolls (NFP) report for January, due on Friday.

Spot silver fell 0.2% to $22.88 per ounce, platinum fell 0.2% to $915.73, and palladium edged 0.1% lower to $975.56.